OUR JOURNEY CONTINUES. FY19 Interim Results Presentation - PowerPoint PPT Presentation

OUR JOURNEY CONTINUES. FY19 Interim Results Presentation

DISCLAIMER This presentation contains forward-looking statements and projections. These reflect thl ’s current expectations, based on what it thinks are reasonable assumptions. The statements are based on information available to thl at the date of this presentation and are not guarantees or predictions of future performance. For any number of reasons, the future could be different and the assumptions on which the forward-looking statements and projections are based could be wrong. thl gives no warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX listing rules, thl is not obliged to update this presentation after its release, even if things change materially. Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as an indication of future performance. This presentation has been prepared for publication in New Zealand and may not be released or distributed in the United States. This presentation is for information purposes only and does not constitute financial advice. It is not an offer of securities, or a proposal or invitation to make any such offer, in the United States or any other jurisdiction, and may not be relied upon in connection with any purchase of thl securities. thl securities have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States, except in transactions exempt from, or not subject to, the registration of the US Securities Act and applicable US State securities laws. This presentation may contain a number of non-GAAP financial measures. Because they are not defined by NZ GAAP or IFRS, thl ’s calculation of these measures may differ from similarly titled measures presented by other companies and they should not be considered in isolation from, or construed as an alternative to, other financial measures determined in accordance with NZ GAAP. This presentation does not take into account any specific investors objectives and does not constitute financial or investment advice. Investors are encouraged to make an independent assessment of thl . The information contained in this presentation should be read in conjunction with thl ’s latest financial statements, which are available at: www.thlonline.com 2 FY19 INTERIM RESULTS PRESENTATION

IMPORTANT NOTES One-off events General • This presentation contains comparisons of results • All financials are in NZ dollars unless stated otherwise against the prior corresponding period, being the (throughout presentation). six month period ending 31 December 2017. • All comparisons are against prior corresponding period • As a result of a reduction in the corporate tax rate (pcp). in the USA from 35% to 21%, enacted in • December 2017, the H1 FY18 result contained a The average NZD:AUD cross-rate (average of the six non-recurring gain of NZD$1.8M, which related to month rates) for H1 FY19 was 0.9251 (H1 FY18 the re-measurement of deferred tax assets and 0.9395). liabilities of thl Group’s US subsidiaries. • The average NZD:USD cross-rate (average of the six month rates) for H1 FY19 was 0.6705 (H1 FY18 0.7335). 3 FY19 INTERIM RESULTS PRESENTATION

H1 FY19 FINANCIAL HIGHLIGHTS WHERE WE ARE. AS AT 31 DECEMBER 2018 H1 H1 H1 H1 FY18 FY19 FY18 FY19 EARNINGS 13cps $34.7M +4% 13cps BEFORE $33.3M INTERIM INTEREST AND DIVIDEND 1 TAX (EBIT) $144.3M $17.5M +6% -17% $136.0M TOTAL NET PROFIT $21.0M 2 REVENUE AFTER TAX (NPAT) (RENTALS & EXCLUDING NON- SERVICES) RECURRING ITEMS DIGITAL $62.9M -14% -$5.4M REVENUE -$2.4M $73.1M INVESTMENT (VEHICLE SALES) LOSSES 3 Note:1) 50% imputed; 2) Excludes $1.8M non-recurring benefit of re-measurement of deferred tax balances; 3) In H1 FY18 this includes losses incurred in Mighway and Roadtrippers. In H1 FY19 this includes losses incurred in thl ’s 50% equity investment in TH2. 4 FY19 INTERIM RESULTS PRESENTATION

KEY POINTS TO NOTE • Earnings Before Interest & Tax (EBIT) growth of 4%, despite USA vehicle sales underperformance. • Net profit after tax, excluding non-recurring item, down 17% - reflecting increased losses in TH2. • The New Zealand rentals & sales business had a record result - with EBIT growth of 7% on the pcp, which also included the 2018 Lions Tour. • Vehicle sales revenue declined by 14% compared to the pcp, driven by a decline in USA vehicle sales. • TH2 investment is on track and showing positive early signs and prospects. • Interim dividend of 13 cents per share declared with an intention to declare a full-year FY19 dividend of 14 cps in line with FY18. • thl ’s FY19 full year NPAT forecast now expected to be around NZ$32M (excluding potential impact of AU$2.5M pre-tax Australian tax issue disclosed at 2018 Annual Meeting), from previous guidance of $32M - $34M. 5 FY19 INTERIM RESULTS PRESENTATION

STRATEGIC UPDATE & DIRECTION A disciplined core business – we will continue to grow the core • We continue to expect a profit increase in our core business EBIT, with further opportunities for improvement in our operating model and an expected recovery in El Monte RV in FY20. • We are able to manage our fleet capacity and capital expenditure, as required, to respond to a softening growth rate in international tourism. • We will continue to explore growth through ancillary revenue streams in all of our jurisdictions, by leveraging our existing infrastructure and capabilities. A digital approach with TH2 • TH2 represents a unique digital opportunity within our industry and we are ensuring that we are positioned as disruptors and not reactors. • TH2 is progressing well and we remain confident that it will succeed. • TH2 now has a strong user base in both Roadtrippers and CamperMate, provides a compelling product proposition and continues to leverage each of thl and Thor’s positions within their respective markets. thl ’s growth through mergers & acquisitions • We have been clear about our intention to grow globally and have an ongoing pipeline of M&A opportunities we are exploring. • When we last reported, we were confident we would see some transactions of significance by now. These have not occurred. • This is simply because we apply the same capital disciplines in assessing M&A opportunities as we do in our operating business. We will only buy or sell if the price is right and only then – we do not mind missing chances to reduce value. 6 FY19 INTERIM RESULTS PRESENTATION

MARKET CONTEXT New Zealand & Australia • Forward rental booking demand in Australia and New Zealand for the second half of FY19 and early FY20 has been strong to date, with high single digit growth in revenue. • We are not heavily reliant on the Chinese market in our New Zealand rentals business. Our main exposure to the China market within New Zealand is in the Waitomo business. United States • There is ongoing competitive price pressure in the USA rentals market – despite this we have strong forward rental bookings. Global vehicle sales • The global vehicle sales environment has declined, as reflected in our half-year results – however, in recent weeks we have seen signs of improvement and expect this to continue in the second half of FY19. • The USA is our primary focus, with New Zealand and Australia performing close to expectations. • Vehicle sales volumes are down but margins by channel (retail and wholesale) are stable. 7 FY19 INTERIM RESULTS PRESENTATION

* \ FINANCIAL HIGHLIGHTS • Overall revenue down 1% on prior period. Within that result, Rentals NZ, Rentals NZD $M Dec-18 Dec-17 VAR % Australia and Waitomo Group were up, while Rentals USA and Kiwi Experience were Operating revenue 207.3 209.1 (1.8) (1%) down. Earnings before interest 34.7 33.3 1.4 4% and tax Operating profit before tax 25.0 29.9 (4.9) (16%) • Rentals AU the stand-out performer with Profit after tax 17.5 22.8 (5.3) (23%) EBIT growth of 35%. NZD $M Dec-18 Dec-17 VAR % • New Zealand Rentals 7% EBIT growth was Ordinary NPAT 17.5 21.0 (3.5) (17%) also impressive, given the Lions tour benefit One-off Deferred Tax Benefit 1.8 (1.8) (100%) USA in the pcp. Profit after tax 17.5 22.8 (5.3) (23%) OPERATING PROFIT BEFORE TAX $M • Group Support Services (excluding Mighway) increased by $1.9M to $3.4M. Well over $1M 70.0 of these costs were incurred in relation to the 60.0 M&A transactions that did not proceed. 50.0 40.0 NZ$m 2.1 (0.4) (0.3) (0.6) 0.5 (5.5) 30.0 (0.7) 20.0 • JV & associates - TH2 investment of $5.4M 29.9 25.0 10.0 for the period, as planned. – Tax H1 FY18 Rentals NZ Rentals AU Rentals USA Tourism Group Group Services Associates Interest Tax H1 FY19 Profit Before Profit Before * JV & & Other * Note: “Other” includes Mighway FY18 losses of $1.3M incurred prior to the 8 FY19 INTERIM RESULTS PRESENTATION establishment of TH2.

CAPITAL EXPENDITURE – FY19 GROSS CAPEX • FY19 gross CAPEX forecast is approximately $190M. • An intentional reduction in CAPEX in response to lower vehicle sales volumes. • FY20 gross CAPEX is also expected to be FLEET SALE PROCEEDS around $190M. • FY19 net CAPEX forecast of $60M. • The reduction in our average fleet age across recent years has given us the ability to age our fleet, if required, with minimal NET CAPEX impact. 9 FY19 INTERIM RESULTS PRESENTATION